Executive Briefings

Freight Costs Continue to Rise for Canadian Shippers

Results published by the Canadian General Freight Index (CGFI) indicate a slight increase recently in the cost of ground transportation for Canadian Shippers in September.

The CGFI rose by .4 percent in September compared to August, while the Base Rate Index, which excludes the impact of fuel surcharges assessed by carriers, also increased by .7 percent. Average fuel surcharges remained essentially unchanged at 13 percent for the month. This is the fifth consecutive monthly increase since the index reached a low point in April 2010.

"Prior increases in overall freight costs for Canadian shippers were primarily driven by the domestic truckload sector. However, we are now seeing increases in trans-border LTL costs, which is contributing to this trend," said Doug Payne, president of Nulogx, a transportation management solutions provider that sponsors the index.

According to Jason Granger, an equity analyst with BMO Capital Markets, "This is consistent with what we have seen in previous cycles. Truckload pricing appears to be leading LTL pricing in the recovery as truckload capacity is quicker to exit the system. However, as the pace of the economic recovery cools, supply pressure, as opposed to demand growth, could arguably be a more significant near-term catalyst for further improvements in industry pricing. Driver shortages, equipment shortages and business failures could all contribute to tighter supply conditions."

For full details on the CGFI, visit: www.cgfi.ca

Source: Nulogx

Results published by the Canadian General Freight Index (CGFI) indicate a slight increase recently in the cost of ground transportation for Canadian Shippers in September.

The CGFI rose by .4 percent in September compared to August, while the Base Rate Index, which excludes the impact of fuel surcharges assessed by carriers, also increased by .7 percent. Average fuel surcharges remained essentially unchanged at 13 percent for the month. This is the fifth consecutive monthly increase since the index reached a low point in April 2010.

"Prior increases in overall freight costs for Canadian shippers were primarily driven by the domestic truckload sector. However, we are now seeing increases in trans-border LTL costs, which is contributing to this trend," said Doug Payne, president of Nulogx, a transportation management solutions provider that sponsors the index.

According to Jason Granger, an equity analyst with BMO Capital Markets, "This is consistent with what we have seen in previous cycles. Truckload pricing appears to be leading LTL pricing in the recovery as truckload capacity is quicker to exit the system. However, as the pace of the economic recovery cools, supply pressure, as opposed to demand growth, could arguably be a more significant near-term catalyst for further improvements in industry pricing. Driver shortages, equipment shortages and business failures could all contribute to tighter supply conditions."

For full details on the CGFI, visit: www.cgfi.ca

Source: Nulogx